Why Peltz Investment Likes SYSCO Corporation (NYSE:SYY)?

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Investor, Nelson Peltz, has taken a significant stake in food distributor Sysco Corporation (NYSE:SYY) through his investment vehicle called Trian Fund Management. The fund acquired a stake of 7.08% in the company, becoming its largest single shareholder. By taking up such a significant stake in Sysco, Peltz is seen as trying to position himself to push for favorable reforms in the company.

Peltz’sTrian Fund Management has met with SYSCO Corporation (NYSE:SYY)’s management, especially CEO William Delaney, to talk about how to improve performance of the company. Trian said in a regulatory filing that Sysco has unperformed, and that is one of the issues it would like to address.

Latest financial performance

Sales at SYSCO Corporation (NYSE:SYY) rose 0.9%, to $12.4 billion in the latest quarter (fourth quarter 2015). Adjusted EPS jumped 6.1% to $0.52.

Fiscal 2015 sales came in at $48.7 billion, indicating an increase of 4.7%. Adjusted EPS for the fiscal year 2015 was $1.84, an increase of 5.1% from the previous year.

Sysco distributes food products to restaurants, hospitals and schools. The company attempted to buy US Foods Inc., a move that cost it $693 million in fiscal year 2014 in termination fees.

Reform talks, details coming soon

The management of SYSCO Corporation (NYSE:SYY) has also confirmed holding discussions with Trian, but said that more details about the talks would be disclosed in the coming month.

Trian, which is known for its activism moves, is apparently pushing for strategic initiatives at Sysco. With more than 7% stake in the company, Peltz’sTrian is in a much better position to get Sysco to do what it desire or considers favorable for shareholders.

Trian’s push for reforms

It should be recalled that Trian previously pushed snacks and beverages maker PepsiCo, Inc. (NYSE:PEP) to separate into two standalone units. The management of PepsiCo maintained that the company was better off as a unified business organization.

Trian’s reform spirit also led it to lobby E I Du Pont De Nemours And Co (NYSE:DD) to break up into separate units.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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